JPS eyes US$500m investment over 4 years

With the retirement of 171.5 megawatts of generating assets of the Jamaica Public Service Company (JPS) scheduled for 2023, the leadership of the light and power company said it is planning a significant investment of up to half a billion US dollars over the next four years to replace those assets.

Also eyeing investments in new generating capacity, the JPS indicated that it was prepared to enter into these arrangements with the Government through the right-of-first-refusal (ROFR) clause set out in the Electricity Act, 2015 and the licence it has to operate.

The ROFR changed the competitive bidding energy policy and grants the JPS the right to replace its generating units when they become due to be retired, according to the schedule determined by the portfolio minister.

Joseph Williams, senior vice-president for generation at the JPS, said that the company received a letter of notification earlier this year and has since made representation to have the assets extended further.

“The requirement schedule for 2023 speaks to a process of retirement and replacement, so you replace and then retire,” he told a Gleaner Editors’ forum at the newspaper’s headquarters in Kingston.

The B6 unit at Hunts Bay in Kingston was retired in 2020 and the company said that two other generating assets there are to be retired, along with assets at its Rockfort and Montego Bay plants.

In February, lawmakers reviewing the Electricity Act, 2015, sent a clear message that they were in favour of removing the ROFR provision in the legislation that is seen by some as a barrier to market reforms in the light and power sector where JPS is a monopoly distributor.

At the committee meeting in February, committee members Phillip Paulwell, a former energy minister, and Aubyn Hill, minister of industry, investment and commerce, insisted that the ROFR clause be removed from the statute but noted that negotiations would have to be held with thr JPS to amend the contractual arrangements.

President and CEO of the tJPS, Michel Gantois, said that his company’s position that the ROFR should not be disturbed remains unchanged.

Williams argued that taking into account the generating capacity that the company’s shareholders had invested in and also the JPS’ obligation to serve its customers, “we believe the right (ROFR) is appropriately placed”.

Addressing the claim by some that the ROFR was stifling competition, Williams said that the stipulated position in law and its licence provides the first option to he JPS to replace its existing generating assets.

“It’s not like we have this right and we put it in and generate power at any cost. If we don’t meet this benchmark that is determined by the ministry with a lot of inputs from consultants taking into account demand and market conditions, then we would have lost that right,” he said.

Gantois pointed out that one of the company’s ultimate obligations is to be a guarantor of last resort for the supply of electricity.

“That means that when everybody else fails to supply electricity because there is no sun or no wind for renewable energy, or they have an issue with their power plant, we are the one on the hook with the licence to supply electricity,” he said.

While refusing to say whether the JPS was willing to go to court to defend the ROFR, Gantois signalled that there could be repercussions.

“We just hope that good heads will prevail to maintain the rights of our consumers because at the end of the day, everything has consequences,” he said.

editorial@gleanerjm.com